Ind-Ra anticipates India’s growth below 6% in FY24
IndiaRatings (Ind-Ra) revised its FY24 growth forecast downward to 5.9% from the Reserve Bank of India‘s 6.4%. The agency predicts that growth would not surpass 6% in 2023–2024 despite factors such as continuing government capital spending, deleverage corporations, reduced NPAs, the Production-Linked Incentive Scheme, and the expectation that global commodity prices will remain stable.
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Ind-Ra anticipates India’s growth below 6% in FY24: Key Points
- While Ind-Ra anticipates services and agriculture to be the major drivers of growth, it thinks industrial growth will remain muted.
- While Ind-Ra anticipates services and agriculture to be the major drivers of growth, it thinks industrial growth will remain muted.
- K-shaped recovery, which isn’t enabling broad-based consumer demand or assisting wage growth, particularly for the people in the lower half of the income pyramid, was emphasized.
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Ind-Ra anticipation: Effect of Inflation
- Regarding inflation, the agency predicts that it will continue to be over the RBI’s objective of 4% while staying under its upper tolerance limit of 6%.
- Core inflation is still high and was 6.1% in January 2023, therefore the RBI should take a significant break from adjusting the repo rate, it added.
- It anticipates a minor decrease in interest rates on 10-year government securities to 7.1–7.2% due to the stable inflation.
- Additionally, it anticipates that the government will achieve its goal of a budget deficit of 5.9% and a current account deficit of 2.5%.
- 3% is the projected current account deficit for the year.
- Ind-Ra analysts point out that it would still take more than ten years for the economy to recover from the lost Covid years, even with everything in place.
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